OPTIMAX: Healthcare Provider Reports Solid Earnings on Strategic Expansion, Target Price Elevated

Performance Review

A prominent healthcare provider has reported a robust financial performance for the second quarter of its 2025 financial year (2QFY25), with core net profit increasing by 10.5% year-on-year to RM4.2 million. The results were in line with both the investment bank’s and market consensus expectations. This positive momentum was largely attributed to a surge in patient volumes and the successful integration of newly established satellite clinics.

For 2QFY25, revenue saw a 6.5% year-on-year increase, reaching RM34.1 million. Quarter-on-quarter, revenue grew by an even stronger 12.8%, reflecting a recovery in surgery volumes following the festive season. The company’s effective marketing initiatives, including online promotional campaigns, also played a significant role in driving patient demand. New income streams from recently launched centres in East Malaysia and Cambodia further bolstered the top line, with Cambodian operations notably expanding by 52.8% year-on-year to RM0.5 million.

Challenges and Operational Efficiencies

Despite the healthy revenue growth, pre-tax profit (PBT) growth of 1.2% year-on-year to RM5.9 million was partially mitigated by higher operating costs. These increased expenses were primarily due to the establishment of new satellite clinics and centres, including associated staff costs and depreciation. Consequently, the gross profit (GP) margin experienced a slight dip, registering 41.9% in 2QFY25 compared to 42.6% in the previous year’s corresponding quarter. However, the management anticipates these operating costs to moderate over the coming quarters.

Future Outlook and Strategic Growth

The investment bank maintains a positive long-term outlook for the healthcare provider, underpinned by its strategic expansion plans and growing regional partnerships across Cambodia, Indonesia, and Vietnam. The company is well-positioned to capitalize on burgeoning medical tourism opportunities and is committed to exploring advanced technologies and innovative services to further enhance its market position. While near-term earnings might experience marginal dampening from the elevated operating costs, the overall growth trajectory remains strong.

Analyst Recommendation

Given the resilient performance and optimistic future prospects, the investment bank has reiterated its “Outperform” rating. The target price has been raised to RM0.84, up from RM0.76 previously, based on rolling over the valuation base year to FY26 with a 23x price-to-earnings multiple, consistent with the company’s 1-year average forward PE. This new target price implies a potential upside of approximately 44.8% from the current price of RM0.58.